Contractors now must provide the same insurance benefits to gay couples that they provide married spouses. The proposal modifies city purchasing ordinances.

The law stresses the city's "fiscal responsibility" to work with companies providing the best services, suggesting that same-sex benefits are quality-driven.

Co-author Benson, a lawyer, emphasized the point. "People who provide the best services are those who are not going to exclude a large portion of the population from being employed by them," he said. "In order to provide the best services, you should provide equal benefits."

Councilmember Barret Lane (13th Ward), also an attorney, voted against the proposal. He said there was not a logical link between offering domestic partner benefits and getting the best workers. "It's not the issue, it's the methodology," he said.

Prior to the meeting, Schiff said quality work was not his main motivation for pushing the ordinance. Equal domestic benefits, he said, are a civil rights issue.

"My main argument is that the city should do business with companies that treat their gay and lesbian employees equally," he said.

While calling Schiff's proposal "the right thing to do," Councilmember Barbara Johnson (4th Ward), noted that the move would anger conservative Republicans who gained power in the 2002 election. "[I]t will harm us in our relationship with the legislature if we do this today," she said.

Schiff said the measure tilts toward an eventual domestic partner benefits for city employees. Times have changed since the Legislature barred the practice in the early 1990s.

"Most large employers in Minneapolis today already have these benefits," Schiff said.

In the 1995 Lilly vs. City of Minneapolis case, a state appellate panel barred the city from offering gay domestic benefits, ruling that state laws prohibit the practice.

Not offering the benefits has cost the city, according to Schiff. "It hurts us," he said. "City councilmembers know that we lose good employees on a daily basis, people who go to work for the private sector."

The new rule will apply to most contractors performing more than $100,000 worth of work, while employing more than 21 employees during 20 workweeks of a calendar year.

There would be a number of exemptions to the new rule. Schiff said union contracts would be exempt as would religious and faith-based organizations.